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Posted on 02/02/2021 11:23:22 AM PST by lightman
Gov. Tom Wolf’s 2021-22 budget proposal contains the largest increase in education spending Pennsylvania has ever seen along with a sizable increase in the state’s personal income tax rate.
While the governor is proposing to raise the income tax for the first time in nearly two decades, some of the new money would be directed to provide tax relief for lower income families and some tax-shifting at the local level.
According to sources, the governor will be proposing hiking the 3.07% personal income tax rate rise to 4.49%, starting July 1. That would be the first time it has increased since 2003. An increase of that size in the personal income tax would raise more than $3 billion annually.
There are nine states with flat tax rates like Pennsylvania currently range from 3.07% in Pennsylvania to 5.25% in North Carolina. With this proposed increase, it would push Pennsylvania into the seventh spot out of nine with only Indiana at 3.23% and Michigan at 4.25% being lower.
The budget proposal seeks to address the inequities created by the state’s flat personal income tax rate by expanding the tax forgiveness credit, according to an administration official. Filers with incomes at or below these thresholds – $15,000 for single filers; $30,000 for married filers; and $10,000 allowance for each dependent – will receive total 100 personal income tax forgiveness. The percentage of tax forgiveness declines by 1 percentage point for each $500 above the threshold for 100 percent forgiveness.
So families with two children making less than $84,000 will receive a tax cut while a family of four making $50,000 will have their taxes eliminated.
It appears the governor’s budget proposal also attempts to boost overall state spending to $37.7 billion which is what the state’s Independent Fiscal Office indicated is necessary to maintain spending at current levels. This year’s general fund budget totals $33.1 billion in state spending with $3.4 billion in federal stimulus funding to help soften the blow from the pandemic recession.
More than $1.3 billion raised from a higher income tax would go to basic education funding, boosting that total to about $8.1 billion. Most of that would go through the 5-year-old funding formula designed to iron out inequities in how Pennsylvania funds the poorest public schools as well as to allow for some tax-shifting off local revenue sources, according to sources.
Wolf is proposing to increase funding for special education by $200 million, to a total $1.4 billion, and the total increase in funding for public schools could approach $2 billion, according to the Associated Press.
The governor is proposing to reduce the 9.99% corporate net income tax and impose a severance tax on natural gas drillers. Pennsylvania is the only major gas-producing state that doesn’t have a severance tax on the product at present; instead, the state imposes an impact fee that is assessed on each drill site. According to the state’s Independent Fiscal Office, the 2020 impact fees equaled an effective tax rate of 3.3%. (West Virginia’s rate, by comparison, is 5%.)
Wolf’s budget proposal also is expected to revive Nelly Bly scholarship program designed to help low- and middle-income full-time students who attend a Pennsylvania State System of Higher Education university. It would be funded by the Race Horse Development Trust Fund, which receives money from slots gaming in Pennsylvania casinos.
He also once again wants to impose a fee on municipalities that rely on the state police for police coverage, and raise the minimum wage to $12 an hour and ratchet up by 50 cents a year until it reached $15.
The Democratic governor will need approval from the Republican-controlled General Assembly to approve his spending plan and his proposals to raise the state income tax and increase the minimum wage.
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But everybody is being schooled from home. They must be saving a fortune.
Consider the school bus fuel & maintenance savings alone...
Wealth redistribution. Those who work must give to those who do not.
Teachers in PA are insanely overpaid.
It’s always for the kids with these politicians.
” families with two children making less than $84,000 will receive a tax cut while a family of four making $50,000 will have their taxes eliminated.”
A family with 2 children is a family of four. What does this mean?
All public school teachers are grossly overpaid.
Why bother proposing it? Just get the PA Supreme Court to mandate it. That is how PA operates these days.
The payoff to the state teacher’s unions for essentially bagging work for a year and making the argument for the economic lockdown so he didn’t have to.
That's why we call the Guv "Tommie the Commie"!
Yeah... Probably this proposal is DOA in the state legislature... Probably.
The marginal utility of new money for public schools is negative.
That means every additional dollar actually makes them worse.
Penna is a blue state now. They won’t mind paying extra taxes. It’s for the children.
This is a ridiculous statement. My wife who is a school teacher makes a whopping 39000 a year. She puts up with a alot of bad kids and parents.
Yes there are a lot of bad teachers, but look at what a babysitter would make baby sitting 30 kids all day. It would be a whole lot more than some teachers make. So even a bad teacher who is basically babysitting is probably under paid. Everyone likes to complain about teachers but most don’t want to give up their jobs and homeschool.
And this is why we moved from PA to FL last year.
but remember our $100,000 teachers didn’t miss one paycheck...not one.....
Making a retirement decision is becoming easier and easier.
It is more than that; we are looking at a redistribution of wealth from those who work to those with children (Whether they work or not).
The primary beneficiaries of Trump’s tax cuts were childless workers renting apartments. Property taxes (at least in states like NJ) primarily go towards the public school system - so childless payers are getting little in return (emergency services and public works are less than half of those taxes).
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